New application development is not where the IT budget - what's left over after maintenance, support and upgrades - is being spent. Instead, organisations big and small are focussing down on developing an integration layer to bridge the gap between applications and legacy systems. This trend is a reflection of the evolving business environment which demands transparency, is risk averse and, above all, wants to see companies take a holistic approach in their business practices to benefit all stakeholders.
Says Carlo Gunter, COO at e.com institute: "It's the 21st century and companies are no longer measured on their financials alone. To win new customers, entice investors and satisfy shareholders, organisations need to prove they are good corporate citizens. This means they not only have to ensure profitability but do so responsibly, attending to aspects of the business such as fair employment practices, legislative compliance, the identification and management of risk, their impact on the environment and contribution to the communities in which they function.
"The integration of business systems provides a global view of the business, as well as insight into the performance of individual parts of the organisation. A prime example of what the failure to achieve this level of governance can mean, is the significant fine imposed on a well-known listed company by the Competition Commission for collusion on the price of their product with their major competitors. Senior management claim they knew nothing of the situation.
"The recent introduction of new business practices can be seen in the financial regulations introduced by Sarbanes Oxley, the governance practices contained in the King Reports and the creation of South Africa's BBBEE scorecard, which compels organisations to implement empowerment practices on a wide range of fronts as well as monitor, measure and record them. These are all driving organisations to find ways to ensure they have a deeper understanding of exactly what is going on in their businesses - the hows and whys of performance, the level of risk they are exposed to, compliance with legislative and regulatory requirements - in order to institute better controls and greater accountability throughout the organisation.
Says Gunter: "Data needs to be taken from numerous systems and centralised to provide a single accurate 'version of the truth' and to ensure greater availability of information to the organisation's decision makers. This 'opening up' of the organisation enables better governance and greater accountability at all levels."
Depending on their available budget, companies are taking one of two routes to enable this much needed integration. Larger companies may make use of off-the-shelf integration tools such as Informatica or Datastage, while smaller companies try to create an integration layer using the services of development companies. Both, however, are focussing on production systems.
The challenges for both are similar. They must deal with the complexities of source systems and business solutions that were never designed to be integrated. Says Gunter: "The key problem is getting data granularity to the same level. For instance, there's a lot of disparity between the data that transactional systems will collect and the data reporting systems that collate data on a weekly, monthly or annual basis will provide."
Issues they must deal with include ensuring the accuracy of data and extracting reports that are relevant to the business. "To better manage the organisation, companies now need to know what makes every leg of the business tick," Gunter notes. "Dashboards, if implemented correctly, are proving to be a useful tool for executives and managers, giving them insight into operations, strategy, targets, budgets, and more, at a glance."
The IT systems that enable a better view and management of the company currently all head the 'to do' lists of CIOs and IT managers. They include data warehousing, Business Intelligence, Performance Management and Business Process Management solutions. Another example of how technology is changing to accommodate the demands of the current business environment is the shift in computing toward Service Oriented Architecture (SOA), which describes standard interfaces for data and application services, opening up silos within the business and introducing greater transparency as well as the ability to agilely adapt processes and business logic without affecting underlying systems.
"Integration of IT systems has never been an easy task, but it is now becoming essential. While the level of sophistication businesses are applying to reach this point varies, they are all moving in the same direction," Gunter concludes.
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